• Burquitlam Building Limited and Morguard Real Estate Investment Trust v. Director, Environmental Management Act

    Decision Date:
    File Numbers:
    Decision Numbers:
    Third Party:
    Canada Safeway Ltd., Third Party


    Decision Date: July 17, 2013

    Panel: Alan Andison, Dr. Robert Cameron, Monica Danon-Schaffer, Ph.D., P.Eng.

    Keywords: Environmental Management Act – ss. 39, 41(1), 53(3)(a), 54, 56; Contaminated Sites Regulation – ss. 49(2), 59; Protocol 16, Protocol 19; contaminated site; remediation; certificate of compliance; groundwater; perchloroethylene

    Burquitlam Building Limited and Morguard Real Estate Investment Trust (collectively, “Morguard”) and Canada Safeway Ltd. (“Safeway”) own adjacent parcels of land in Coquitlam, BC. Part of Morguard’s land (the “Morguard Site”) and part of Safeway’s land (the “Management Area”) were contaminated with tetrachloroethylene, also known as perchloroethylene (“PCE”), from a dry cleaning operation previously located on Morguard’s land. The contamination was discovered in or around 1999.

    Morguard chose to conduct voluntary remediation on the Morguard Site and the Management Area under section 54 of the Environmental Management Act (“Act”). The remediation involved a combination of soil removal and in-situ chemical oxidation, in accordance with an approval in principle granted by the Ministry of Environment (the “Ministry”). The remediation was conducted between 2005 and 2008 by Morguard’s environmental consultant, AECOM Canada Ltd. (“AECOM”). The remediation addressed two separate vertical depth units: Zone A – to a depth of approximately 11 metres below the ground surface; and, Zone B – consisting of soils and a deep aquifer from 11 metres to approximately 30 metres below the ground surface. Based on investigations, AECOM determined that, directly below Zone B, was a low permeability confining layer consisting of silt and clay. AECOM believed that the silt and clay layer would protect the underlying geological unit (Zone C), and therefore, no testing of Zone C was performed.

    After remediation, AECOM took 47 soil samples from Zone A, 26 soil samples from Zone B, three groundwater samples from Zone A, one groundwater sample from Zone B, and installed soil vapour probes on the Morguard Site and the Management Area. The soil, groundwater, and soil vapour samples revealed only one marginal exceedance of the standards set out in the Contaminated Sites Regulation (the “Regulation”): the groundwater sample in Zone B. Additional chemical treatment was applied to the groundwater at that location. By July 2010, Morguard confirmed that the groundwater contained no exceedances.

    Meanwhile, in October 2009, Morguard applied to the Ministry’s Director, Environmental Management Act (the “Director”), for a single certificate of compliance for the Morguard Site and the Management Area. Morguard sought a certificate of compliance confirming that the PCE in the soil, groaundwater, and soil vapours on the Morguard Site and the Management Area had been remediated to the applicable numeric standards set out in the Regulation.

    In August 2010 and January 2011, Morguard submitted an amended Confirmation of Remediation Report and addendums to the Director regarding the groundwater and soil vapours in the Management Area, in order to comply with changes to the Ministry’s soil vapour guidelines that came into force after Morguard submitted its initial application for a certificate of compliance.

    In January 2011, the Director commenced her review of Morguard’s application using an external reviewer, GeoEnviroLogic Consulting Ltd. (“GCL”).

    In February 2011, the Ministry’s standards applicable to groundwater contamination changed.

    Also in February 2011, Safeway notified the Director and Morguard that it planned to construct an underground parkade on its property. Safeway’s development plans prompted Morguard to re-evaluate soil vapours, and in May 2011, Morguard submitted soil vapour risk assessment information to the Director.

    In May 2011, the Ministry’s external reviewer, GCL, encouraged Morguard to divide its certificate of compliance application into two applications: one for the Morguard Site seeking confirmation that it was remediated in accordance with the numerical standards in the Regulation; and, one for the Management Area confirming that it was remediated in accordance with the risk-based standards in the Regulation. Morguard agreed.

    In June 2011, GCL completed its review of Morguard’s reports and documents, and concluded that the reviewed material was “in satisfactory compliance” with the requirements of the Act and the Hazardous Waste Regulation.

    In July 2011, the Director sent a copy of a draft certificate of compliance to Morguard for the Morguard Site, and a copy of a draft certificate of compliance for the Management Area to Safeway for comment.

    In August 2011, Safeway advised the Director that it objected to the issuance of the certificates of compliance. Safeway advised that its environmental consultant, NEXT Environmental Inc. (“NEXT”) had discovered PCE contamination in excess of certain regulatory standards outside of, and down gradient from, the Management Area. NEXT believed that dissolved PCE contamination persisted on, and continued to migrate onto Safeway’s property from, Morguard’s property.

    Based primarily on the information from NEXT, the Director refused to issue the certificates of compliance, on the basis that Morguard’s application was incomplete and contained errors. Among other things, the Director concluded that Morguard had not provided a detailed site investigation report for the Management Area, as required by sections 49(2) and 59 of the Regulation.

    Morguard appealed the Director’s decision to the Board. The main issues in the appeal were the extent to which the PCE contamination had migrated from Morguard’s land to Safeway’s land, the depth of the contamination, and whether Morguard’s remediation met the applicable requirements of the Act and the Regulation, such that certificates of compliance should be issued. Morguard also raised issues regarding whether the Director’s decision-making process was fair, and whether the Director provided adequate reasons for her decision. In addition, Morguard submitted that the burden of proof in the appeal should be reversed, such that the Director should be required to justify her decision, rather than the burden being on Morguard, as the Appellant, to prove its case.

    Morguard requested that the Board order the Director to issue the certificates, or alternatively, identify the deficiencies in Morguard’s applications and provide Morguard with an opportunity to remedy those deficiencies before rejecting its applications.

    Safeway and the Director opposed the appeal.

    The Board found that its general rule that the Appellant has the burden of proving the facts on which it relies, should only be reversed in exceptional circumstances, such as when the decision under appeal is so lacking in reasons that the Appellant is unable to prepare its case. The Board also found that the Director’s written reasons for her decision disclosed sufficient information for Morguard to prepare its case, which it had done so. Therefore, there was no reason to reverse the onus of proof in this case.

    Next, the Board considered whether the Director breached the rules of procedural fairness in reaching her decision. The Board found that there was no indication that the Director was biased. The Board also found that the Director provided adequate written reasons for her decision. Moreover, the Board held that the appeal was conducted as a new hearing of the matter, involving new evidence that was not before the Director, which would allow the Board to decide whether to issue the certificates.

    The Board also considered whether Morguard had complied with a “requirement imposed by the director” in accordance with section 53(3)(a)(iv) of the Act. Specifically, the Director submitted that one of her reasons for refusing Morguard’s application was that Morguard had not fully complied with a requirement to determine the full extent of the contamination. The Director asserted that she had imposed this requirement in a November 2004 letter to Morguard which stated that “the ministry expects you to advise affected persons… of the contamination, determine the full extent of the contamination and prepare and implement a remediation plan.” The Board found that the statements in the letter did not constitute a legally enforceable “requirement imposed by the director” within the meaning of section 53(3)(a)(iv) of the Act, as the letter stated that it was an “expectation” only. The Board held that the imposition of a requirement under the Act is a serious matter that should be stated in the clearest possible terms, and in this case, the Director did not make it clear that she was imposing a mandatory requirement under a statutory authority.

    Additionally, the Board considered whether Morguard had provided a detailed site investigation report, and whether it was required to do so under sections 49(2) and 59 of the Regulation. The Director acknowledged that she did not order Morguard to complete a detailed site investigation report, but she argued that an order was not necessary for such a report to be required, based on the definition of “detailed site investigation” in section 39 of the Act. Given that section 41 of the Act states that a director “may order” a detailed site investigation report, the Board concluded the requirement in section 49(2) of the Regulation to provide a detailed site investigation report does not apply unless a director has ordered a person to complete such a report. In addition, based on the language in section 59 of the Regulation, the Board concluded that a detailed site investigation report is not required to be in the form of a single clearly-labelled document, although this may be preferable. In the present case, the Director did not order Morguard to submit a detailed site investigation report, and therefore, such a report was not required under section 49(2) of the Regulation. Even if a report had been required, the Board concluded that the information submitted by Morguard fulfilled the requirements of section 59 for a detailed site investigation report, although the information was not in the form of a single clearly-labelled report. However, the Board noted that, although a detailed site investigation report was not required, Morguard still had to fully identify the areas, depths and degrees of contamination, as the Director has the statutory authority to refuse an application for a certificate of compliance if insufficient information is provided, under sections 53(3) and 56 of the Act.

    The Board then considered the relevance of the NEXT’s data, and whether it provided a basis to refuse Morguard’s applications. Safeway relied on the exceedances detected by NEXT on Safeways’ property as an indication of possible PCE contamination above the applicable numerical standards in Zones B and C within the Morguard Site and the Management Area. Safeway argued that Morguard did not sample deeply enough to determine whether PCE contamination remained in those areas. Similarly, the Director submitted that NEXT’s data suggested that Morguard’s investigations did not fully delineate the extent of the contamination, and that the groundwater remained contaminated above the applicable standards on Safeway’s property near the Management Area.

    The Board considered the data and expert opinion evidence provided by all of the parties. The Board noted that, although Morguard did not drill into Zone C for sampling, the experts generally agreed that drilling is not an effective way to detect a dissolved non-aqueous phase liquid such as PCE, due to the unpredictable nature of the migration of such substances, which are heavier than water and do not necessarily spread in the same direction as the flow of groundwater. Although a PCE exceedance was detected in one groundwater sample in Zone B in 2005 before the remediation was complete, the Board found that the PCE concentration in that sample was still relatively low, and the samples at that location following the remediation were well below the applicable standard. The Board also found that the low permeability silt/clay layer at the bottom of Zone B on the Morguard’s Site and the Management Area would have prevented PCE from migrating into Zone C at those locations, and that PCE must have migrated into Zone C due to a break in the low permeability layer on Safeway’s property outside of the Management Area. Further, the Board found that the PCE contamination likely migrated to Safeway’s property over several decades, and was likely present before Morguard conducted remediation. The Board concluded, therefore, that the exceedances found on Safeway’s property did not indicate ongoing contamination on the Morguard Site or the Management Area, or ongoing migration from those areas, or that the remediation of those areas was inadequate. The Board also concluded that, although further sampling by Morguard may have been prudent, it was not required and would have been extremely expensive, and the expense of further sampling is a relevant consideration under section 56(1)(c) of the Act, which provides guidance to persons conducting remediation and to a director when considering applications for certificates of compliance.

    Finally, the Board considered whether a certificate of compliance should be issued for the Morguard Site and/or the Management Area. The Board noted that section 53(6) of the Act provides a director with the discretion to issue a certificate for part of a site. The Board found, therefore, that although PCE contamination migrated from Morguard’s property to Safeway’s property, the contamination remaining on Safeway’s property outside of the Management Area may be the subject of a separate application for a certificate of compliance. The Board concluded that Morguard had determined the depth and extent of the contamination, and had remediated the Morguard Site to the applicable numerical standards. The Board also concluded that the Management Area was remediated to risk-based standards. Consequently, the Board sent the matter back to the Director, with directions to issue certificates of compliance for the Morguard Site and the Management Area.

    Accordingly, the appeal was allowed.